Shares of Advanced Micro Devices Inc. shot up 11% in afternoon trade, to pace the PHLX Semiconductors Index's gainers, as the U.S.-China trade-war truce helped boost sentiment toward the recently beaten down sector. AMD's trading volume swelled to 101.7 million shares, making the stock the most actively traded on the major U.S. exchanges. The semiconductor index (SOX) rallied 2.5%, with all 30 components gaining ground. The sector had been underperforming the broader market amid fears tariffs resulting from the trade war would weight on earnings and sales, with the SOX down 9.3% over the past three months while the S&P 500 has down 3.9%. Among the SOX's other more-active components Monday, shares of Micron Technology Inc. climbed 3.1%, Intel Corp. rose 1.3%, Qualcomm Inc. advanced 1.3%, Nvidia Corp. rallied 3.5% and Applied Materials Inc. gained 2.8%.

Dec. 3, 2018 at 1:17 p.m. ET

by Tomi Kilgore

AMD's stock soars 10% to pace all gainers in the PHLX Semiconductor Index

AMD's stock soars 10% to pace all gainers in the PHLX Semiconductor Index

Shares of Kulicke & Soffa Industries Inc. plummeted 12% toward a near 2-year low, after the semiconductor equipment maker beat fiscal fourth-quarter earnings expectations, but said it anticipated "relative softness" in the current quarter. The company reported late Monday net income for the quarter to Sept. 29 that fell to $29.6 million,or 43 cents a share, from 41.2 million, or 57 cents a share, in the same period a year ago. Excluding non-recurring items, adjusted earnings per share came to 45 cents, above the FactSet consensus of 30 cents. Revenue fell 14.4% to $184.8 million, just shy of the FactSet consensus of $184.9 million. The company said it expects first-quarter revenue of $150 million to $160 million; the FactSet consensus as of Oct. 31 was $191.1 million. The current consensus is $167.7 million. The stock, which is on track to open at the lowest price traded during regular session hours since Feb. 1, 2017, has tumbled 21.4% over the past three months through Monday, while the PHLX Semiconductor Index has shed 11.3% and the S&P 500 has lost 5.8%.

Stocks opened lower Friday, on pace to log weekly declines, as chip makers fell following disappointing earnings reports from Nvidia Corp. and other semiconductor companies. The tech-heavy Nasdaq Composite declined 1.1% to 7,181, while the Dow Jones Industrial Average shed 113 points, or 0.4%, and the S&P 500 lost 0.6%. Shares of Nvidia were off 19.5% in early action, while the PHLX Semiconductor Index dropped 2.6%. For the week, the S&P 500 was on track for a 2.4% fall, while the Dow and Nasdaq were headed for declines of more than 3%.

B. Riley analyst Craig Ellis downgraded Applied Materials Inc. and Lam Research Corp. to neutral from buy on Monday, citing concerns about the memory industry. Applied Materials' NAND and display businesses are overexposed to the smartphone market, he said, "an attribute we should have reflected earlier this year in our ratings stance." He expects that the company's Nov. 15 earnings report could be similar to other recent ones from semiconductor-equipment companies "with solid [second-half] quarterly revenue and margin execution but a meaningful cut to 2019 [semiconductor] EPS." On Lam, he believes that SK Hynix Inc. became "materially more tentative" with its 2019 capital-expenditure commitments over the past week, and he's also worried about Samsung Electronics Co. Ltd.'s recent commentary on memory spending, particularly when it comes to NAND. "While quite impressed with Lam Research's C3Q margin and share repurchase execution which helped sustain a buy at the time, we now believe NAND spending overhang creates a cloud of uncertainty for shares," he wrote. Applied Materials shares are up 0.4% in Monday morning trading, underperforming the S&P 500 and PHLX Semiconductor Index, while Lam shares are up 1.8%, slightly ahead of both benchmarks. Lam shares have slipped 32% over the past 12 months, as Applied Materials shares have fallen 43% and the S&P 500 has gained 4.4%.

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